Handelsbanken has raised its recommendation for Nibe to Hold from Sell, while nudging its target price up to SEK 35 from SEK 34, according to a recent research note.

The bank notes that the stock has pulled back following the rally triggered by the Q4 report and is now trading at more reasonable levels.

At the same time, signs of recovering demand for heat pumps are emerging, including an uptick in inquiries in Germany and rising energy prices that enhance profitability relative to gas. While forecast adjustments remain limited, the risk-reward profile is deemed to have improved.

"Our forecasts for adjusted operating profit are now close to consensus. Combined with the shifting dynamics of the energy market and Nibe's weak share price performance, we have chosen to upgrade our recommendation to Hold," Handelsbanken stated.